Canon reorganizes IT business channel structure

With Canon India announcing a new go-to-market strategy, the company is now following a channel wise approach for its products in India. 

The company has three different channels for distributing its products in India - office automation channel, photo channel and IT channel. 

The company is aiming for 30 per cent market growth in 2006 to reach the target of Rs 400 crore revenue and has recently appointed eSys Information Technologies as the national distributor for its bubble jet printers, laser printers and scanners starting January 2006. 

Currently, Canon India has three distributors in India and is working towards having a single distributor — eSys - all over India. 

Canon's IT business currently contributes 35% of the company's revenue. Going forward, Canon India IT sales senior national manager VP Sajeevan expects this business to contribute 38% of Canon's targeted revenue of Rs 400 crore in 2006. 

Elaborating the company's approach towards “de-layering the distribution channel” in the IT business, Sajeevan said, “Earlier, there were four layers in our distribution chain — Canon, regional distributor, premium partners and resellers. As part of the strategy shift, we have removed one layer - that is of distributor - in the metros and would sell directly to our premium partners and they would in turn sell to the resellers. eSys would now cater to the premium partners in non-metros, while in metros the company would start direct billing.” 

“We have already started direct billing to the premium partners in Cochin and
Trivandrum, while in Kolkata we would start this process this month itself. In total, we would cover 10 metros by this year end,” he added. 

In the non-metros, the company would still continue to work with the existing framework. According to
Sajeevan, through this restructuring the company plans to help channels make reasonable profits by selling Canon's IT products. He said, “Channels would be able to realize healthy margins due to direct billing due to reduced number of partners in each city. There would be around two partners selling Canon IT products in each city. The company would also work towards controlling the market operating price (MOP) so that there would be no price discounting and our partners can make money.” 

Canon is also betting big on the retail part of the IT business. Sajeevan expects 35 percent of Canon IT business from the IT retail channel. He said, “eSys would also cater to all our retailers in both metros and non-metros. We are setting up Canon IT Image zones all over India to showcase our products in the retail space. These zones would display Canon IT products like laser printers, scanners, camcorders,
digicams, etc.” Canon has set up more than 85 such zones as of now and plans to set up 150 Canon retail points by June 2006.
(CyberMedia News)

PRAGATI SIMLOTE

NEW DELHI